Shipbuilding firm Pipavav Defence & Offshore Engineering jumped more than 7% on the BSE following reports that the company is likely to take the CDR route to restructure a Rs 7,000-crore debt.
Sources at the CDR cell told FE that though the account has not yet been referred to it, bankers have intimated the cell about the account. “Pipavav could be discussed by the CDR cell at its next meeting on January 28,” they said.
The company could be the latest entrant into the CDR cell from the shipbuilding sector after ABG Shipyard and Bharti Shipyard. While ABG’s restructuring package worth Rs 11,000 crore is still being inplemented, Bharati Shipyard’s Rs 3,500 crore loans were taken over by Edelweiss asset reconstruction company (ARC) in July last year.
A lender who was part of the JLF that decided to recast the loan said the company had very little orders and, therefore, was not able to service the debt. “It had opted for capacity expansion but did not find new orders to utilise the capacity,” he explained.
He added that once the JLF approaches the CDR cell with its package, they will appoint an evaluation committee to look into the viability of the proposal and, then, decide whether to recast the debt.
The company reported a net debt of Rs 5,480.8 crore in FY14 and an operating profit of Rs 778.7 crore in the same period. Thus, the company has a net debt to Ebitda ratio of 7 — that is, the debt is seven times its operating profit. In Q2FY15, Pipavav reported a net loss of Rs 68.3 crore on the back of Rs 212.1-crore revenues. The interest expenses of the company have also grown considerably from Rs 119 crore in FY11 to Rs 465.2 in FY14.
The Mumbai-based company is promoted by Skil Infrastructure (36.25%), Skil Shipyard Holdings (5.21%) and Grevek Investment And Finance (3.04%). The scrip ended the day’s trade at Rs 56.5 on the BSE, down 0.35% from the previous close.